|For Beginners: Three Tips to Help You Find the Perfect Fixer
If you're looking to get started investing in real estate by fixing and flipping houses,
you'll want to know what to type of property to buy. Many real estate investors make millions turning
ugly houses into dollhouses. On the other hand, some inexperienced investors lose money buying houses
that just don't turn a profit.
1. Learn Your Market
Your first task, exploring your market, helps you know a bargain house when you see one.
Look at houses for sale in your area. Keep track of sales and how long the houses take to sell. Ask
about the terms of these sales because this helps you understand how sellers market their property.
For instance, if a seller paid closing costs for the buyer, did the price rise from the listed price
accordingly? Or, did the seller come down on the price and pay the buyer's costs, too. Examine the
sales that sell quickly. What home features and financing options prompted the fast sale?
Also, look at model homes. Buyer often chose resale homes because they can't wait for a new
home to be finished. But, these buyers like the amenities found in newer homes. When you transform
your fixer, you'll know what buyers desire and you'll make informed makeover choices.
2. Know When "Bad" Can Be Good
When you first start out in your real estate "fixer" enterprise, you'll want to
look for houses needing only cosmetic work. Look for houses that just need cleaning up, painting,
and new flooring. Don't be afraid of stinky houses that show horribly; look for fixers with peeling
paint, holes in the wall, stained carpeting, and trash in the yard. Remember, these houses won't look
good to most buyers, but that other investors see them as gold mines. You need to use your imagination
when viewing theses homes. Try to visualize the finished product.
3. Know When "Ugly" Means "Pass"
If the house has cat urine staining the carpet, the subflooring or concrete foundation may
need replacing. Dog urine cleans up easier. If the walls have too many cracks and bumps, you may need
to hang new sheet rock or hire a professional plaster refinisher. Look for signs of plumbing problems
such as water stains under sinks and loose flooring. When you're new to real estate investing, always
remember your limitations. Use caution when considering houses needing structural repairs. Some
rehabbers replace walls, plumbing, structural beams, sub-flooring, and electrical systems, but they
acquired those skills after years of experience or pay a professional.
If you find a house with structural problems, get estimates from reliable contractors to do
the work. Experience teaches you how to do more over time. Until then, rely on experienced
contractors to do the repairs. Take professional estimates into account before deciding whether or
not to purchase an investment property.
Why would anyone want to do this? How much does the average investor make? In Philadelphia,
real estate investors only make offers on houses they expect to make $30,000 on. In Southern
California, many investors make $50,000 to $100,000 on each house.
You can make a fortune fixing ugly houses. Learn your market. Know when "ugly" means
bad that can be good, and when stinky means pass.
Copyright (c) 2005 Jeanette J. Fisher. All rights reserved.
About the author:
Back to Real Estate Investing Articles
Jeanette Fisher, Design Psychology Professor, is the author of Doghouse to Dollhouse for Dollars,
Credit Help!, Joy to the Home, and other books. Jeanette teaches Real Estate Investing and Interior
Design Psychology. For more articles, tips, reports, and newsletters, see